The ramifications of these two mortgage giants going under is not pretty...big bailout on the way funded by you, joe taxpayer.

Fannie and Freddie on the brink
Continued sharp slide in shares of mortgage finance firms raises new concerns about need for new capital, threat of government takeover.

Last Updated: July 11, 2008: 10:59 AM EDT


Financial stocks get slammed
Read Treasury Secretary Paulson's statement
Paulson: Focused on Freddie, Fannie
The $5 trillion mess


NEW YORK (CNNMoney.com) -- The anxiety over Fannie Mae and Freddie Mac, crucial to a recovery of the battered housing market and the economy as a whole, reached fever pitch on Friday as shares plunged on speculation of a looming bailout.

Immediately after the markets opened, shares of Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) fell more than 47% from their already battered closing price the day before. They soon rebounded slightly but Fannie shares were down 43% and Freddie shares were off 45% about an hour after opening.

The two firms hold or back $5 trillion between them, or about half the mortgage debt in the country.

They play a central role in the U.S. housing market, providing a crucial source of funding for banks and other home lenders, especially since a credit market crisis last summer left them the only major players in packaging pools of mortgage loans into securities for sale to investors.

If they were unable to do so, it would significantly raise the cost and restrict the availability of mortgage loans, causing significantly more problems for already battered housing prices and sales. That in turn would be another significant problem for the overall U.S. economy, as well as global credit markets.

The New York Times reported Friday that senior Bush administration officials are considering a plan to have the government take over one or both of the companies if their problems worsen.

The shares started to erase early losses when word came that Treasury Secretary Henry Paulson was set to speak. He said that the government's primary focus is making sure that mortgage giants Fannie Mae and Freddie Mac remain as presently constituted to carry out their mission.

Even before the latest report on a possible rescue plan, speculation about the future of the firms this week sparked a run by investors away from their shares. That in turn raised questions about how difficult and expensive it will be for them to raise needed capital in the future, which fed into the stock plunge in a vicious cycle.

In the first four trading days of the week, the shares of Fannie have lost 30% of their value, while Freddie shares have tumbled 45%. For the year, Fannie is down 67% and Freddie 77%.

"Fannie Mae and Freddie Mac have lost investor confidence evidenced by the rapid brutal sell-off in their stocks, which could dramatically hinder their ability to raise any additional capital going forward," wrote Richard Hofmann of research firm CreditSights in a note Friday. He added that the firms' ability to function normally "remain at the core of government efforts to stabilize the mortgage markets."

A number of scenarios were being discussed by bankers and analysts about what the government may do to deal with investors' current crisis of confidence in the firms.

Jaret Seiberg, a financial services analyst for the Stanford Group, a Washington research firm, said Thursday options that among the options are: The Federal Reserve could purchase some of the Freddie and Fannie debt or mortgage-backed securities; the Treasury Department could make billions of dollars in loans to the companies or even buy stock in the companies.

"Government officials are always planning for worst-case scenarios and our note is intended to highlight some options that may be available to policymakers," he wrote. "We suspect hybrid versions of these plans also are possible."

Under current law, the Office of Federal Housing Enterprise Oversight (OFHEO), the regulator of Fannie and Freddie, could take control of the firms if their capital falls too far below required levels. It is unclear how the firms would operate in that situation, known as a conservatorship.

OFHEO Director James Lockhart issued a statement late Thursday saying that his agency was closely monitoring the firms' credit and capital positions. But he pointed out that they had already raised $20 billion in capital and that they adequately capitalized, holding funds well in excess of his agency's requirements.

Still investors were worried that continued problems in the housing market would cause more than the $12.7 billion losses the two firms have lost between them since last July. The decline in their stock value makes raising additional capital to cover those future losses that much more expensive and difficult.

It is also unclear if current shareholders would see their holdings wiped out under some of these government rescue options - leading to the pre-market sell-off.

A Fannie spokesman said Friday morning that the company had no comment, while a spokeswoman for Freddie was not available for immediate comment. Both firms issued statements on Thursday saying they had the necessary capital to continue operating, adding they would not comment on the decline in their stock value.

First Published: July 11, 2008: 8:35 AM EDT

I just asked BlueJay on another thread how he felt about Phil Gramm being John McCain's financial adviser. Gramm pretty much defeated the most important lending and banking regulations put in place during the great depression. So, now, you have articles like the one above.

Even if you love McCain, you better pray Gramm doesn't come along with the package for president.

"You've heard of mental depression; this is a mental recession," and "We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline." - Phil Gramm - July, 2008.

FACT: Mortgage crisis brought on by people whom signed on the bottom line all by themselves. YUP that's right, no help! Imagine responsible adulthood. Even after they were explained to what could happen and the risk involved if their rate went up.

FACT: Oil prices controlled by supply/demand and market speculation. Speculation from Iran threatening to destroy the middle east.

FACT: The above are the TWO biggest factors in our economy.

*subnote - Although any racist comments on behalf of Trinnity united church of Christ are dismissed by Obama (member therein). No problems there...What meh worry!

FACT: YOU ARE COMPLETELY WRONG. Those people that are losing their houses were only allowed consideration for a loan because of the deregulation of the banking/securities industry, spearheaded by your buddy Phil Gramm. We won't even get into fraud and predatory loans from those same institutions .

The oil industry is all smoke and mirrors - they can charge whatever they want, what are we gonna do about it.

So laughing, next......

So when you signed (if you have a home), it was Gramm's responsibility?!? LOL. j/k =P

Ya gotta look at the glass half full. I know it's hard to do sometimes when the mentality of your side if anything remotely Republican is corrupt, wrong, evil or bad. I know, I know...People like childish Keith Olberman give you guys a bad partisan rap, but you've just got to look beyond the fences.

Mortgages were changed to give oppurtunity to people whom otherwise wouldn't have a home. What they do with that oppurtunity is their choice and their responsibility. It's like somebody handing you a second chance for the American dream of owning a house. Now I do give you the token misleading broker signing people up on rip-off loans, but every economy in the world has scammers. IF a bank or broker intentionally signed someone up for a loan knowing their client couldn't make the payments that would be one thing. But knowing it's not in their interest to own empty homes, it's highly unlikey. 99+% of American homes are NOT in foreclosure and make their payments.

Be wise, weary and do your research. It's not the sort of corruption like a Country Wide scandal where they gave out low interest rate sweetheart loans using your above mentioned spearheaded tactics to democrats like Obama and all his neighbors around him.

You know it's funny to listen to people talk about market deregulation like they actually know the regulations which you know damned well they don't LOL.

Male prostitutes make more money then female.

Obama got his loan from his neighbor. Google it.

[quote=blue_jay]"FACT: Oil prices controlled by supply/demand and market speculation. Speculation from Iran threatening to destroy the middle east.



Not totally correct. The fact is oil is priced in U.S. dollars. Our dollar is in the toilet, hence the cost of oil goes up. Yeah, worldwide demand is growing but a crappy U.S. fiscal policy is also a major factor.

CNN.com...front page. 2nd biggest bank failure in US history just happened today at 3pm. Get ready for more ie WAMU and Wachovia are the two biggest being mentioned right now...

I see a serious recession lasting for years. There is simply no way our economy can absorb $4.00 gas without huge disruptions. Everything from RV sales, to cars, trucks, campgrounds, gas stations etc. etc. will be negatively effected. Add the mortgage mess to the mix and we are in for a loooong tough time.

I do not blame Bush for this but certainly can't credit his team with doing much to help either.

I doubt either candidate can do much about it, but the loser will undoubtedly blame the winner for not fixing everything in a flash.

We will never again see cheap oil and that will significantly affect almost every aspect of our lives.

I agree DV, we are in a recession and its going to be a long one. Ya KK, 4% inflation my ass...try 14%+ in reality. IF Fannie and or Freddie bite it and their 5 TRILLION in mortgages along with it we are hearing the word DEPRESSION being mentioned seriously for the first time in 75 years from respected voices in the financial world.

Hope the doomsdayers are wrong but if those two go down it will make these bank failures pale in comparison. One lesson to be learned from IMB implosion today is if you are fortunate enough to have 100k+ liquid make sure it is in various locales and not locked up in any one bank as if what happened today happens to WAMU or Wachovia or whoever next week or month anything over that 100k could easily just disappear...ah screw this im gonna go have a beer...cheers

Keep smilin boys--we still live in America!

thats true, we coulda been born in somalia

If the price of fuel stays the same or goes higher, DV is right. Our oil based economy will crash like a house of cards. In our area, Boeing being a big employer will get hit hard. Price of fuel goes up, airlines cut back on flights, raise prices, buy less parts, cancel orders. Can you imagine a large chunk of those folks losing their jobs and not being able to pay for those houses? Ouch!

Drill now!

It's so obvious the partisan battle taking place in congress with special interest lining the deep pockets of democrat congressmen. No drilling or you lose their support. Somehow some of these greencommies convinced them that these new light bulbs containing mercury were environmentally sound. Yet go to the EPA's website and if you bust one on your floor they've got to call in a hazmat crew! Go figure.

But raise da roof! Obama! W()()T W()()T! He's our hero. Heck people faint just thinking about him!




No crooks here! What meh worry!

There are so many sad things wrong with this guy and he's not even in office yet!

Just curious...in the background, are those the same people holding the change signs in each city? LOL

Maybe because a lot of Americans are sitting on their couch (high on pot or crack) waiting for their Welfare check...

On the average, we don't hold a candle to the work ethic/ambition of the Americans present during WW2........let alone the patriotism.

Kef Kid was doing great there until he started grasping for conspiracy theory at the treasury secretary. No surprise there, leftards are always good for those.

Meanwhile Americans continue to pump gas at $4/gallon + like its no big deal. $200 barrel = $7 /gallon btw. Doesn't look like that's too far off. Expecially if we get someone in there like Obama to withdrawal troops and create some instability issues.

B-J!

You're a funny guy:

http://youtube.com/watch?v=twW_riHWz_4

Still laughing, next....

good call Hankster! I will not defend Clinton, but it is important to note that Gramm got the Commodity Futures Modernization Act (a 262 page document)attached to the already contentious $384 billion budget spending package hammered out at the last minute. No one read it or really knew what was in it (ignorance is no excuse) so it passed as an attachment. Among other things, the bill did the following:

Exempted energy trading from regulatory oversight. As a result, Enron wrecked the California electricty market and cost consumers billions before it collapsed. Approximately eight years before this, Gramm's Wife, Wendy Gramm was Chairperson of the Commodity Futures Trading Commision. She pushed through a rule excluding Enron's energy futures contracts from government oversight. Wendy later joined Enron's board and received anywhere between $915,000 and $1.8 million.

Made Credit Default Swaps unregulated. These are essentially insurance policies covering losses on securities in the event of a default. With no regulation, no one made sure that banks and hedge funds had the assets to cover the losses the CDS's were to guarantee. This was supported by Alan Greenspan and Fed Chairman Larry Summers - a $62 trillion market which is about four times the size of the stock market. If this doesn't scare you, you are beyond reach.

McCain should drop Gramm like plutonium. I won't bore any of you with more facts as it is all too depressing.

National Review.

NewsMax.

Media Research. (As in Brent... Bozo... Bozell?)

That list right there sounds pretty "fair and balanced" to me Hank!

Nice to see the hang over has worn off--------your alive!

Thats right !!! Don't you owe us a picture of you in a Tux Stam ?? I for one would be proud to see it.

A lovely bride and a bridsmaid with an attitude. I wish i had made it there - looks like fun.

Seems to me Dave that old Stammeroo didn't invite anyone that might me competition to his "hotness".

I had alway's taken you for a "non dancer" but you cranked it out for hours on end. Good job DAD, we had a blast!

Thsi tread took a while to read through but it is pretty impressive how this became McCains problem thruogh Gramm. Have any of you ever heard of Jim Johnson? Former CEO of Fannie Mae who single handed managed to get these "exemptions" past that you all credit Gramm for. He was head of the team looking for Obama's VP until last week. Found out about his "friendly" rates to others and resiegned. He was slated to become a top Obama cabinate member until last week. Amazing how that dirty SOB McCain, how dare he, has Gramm in his advisors but Obama gets a pass for Johnson.
Take the liberal blinders off because this problem is much deeper than Gramm or Johnson and runs deep in both compaigns. Equal op blame to go around wether you like it or not.

See?

A vote for Ron Paul ISN'T a wasted vote........it's the ONLY responsible vote.

But you "party first, country second" types can spend the next 4 months trying to justify your votes for the other two goats.

Have fun, and sleep well.

I was way to drunk to take any photos, and I still have not recovered. Spent the next day out on hood canal soaking my head in the cool water and teasing back coors lights Stam looked suprisingly comfortable in the tux!

As my one and only designated driver, the Rev. had to cut out of there by 9:00. I heard it only picked up from there!

At least I brought enough beer to share with others.



Good party, Stam! Can't wait until the next one is married!

Oh no, I've never blamed it solely on Gramm, I've said he spearheaded legislation. No one person is smart enough to pull it all off by themself.

To put a nice bow on it, and not a bow-tie for Stam's tux, we are talking about unethical, silver spoon people, gutting regulations that protect John Q. Taxpayer. It does not know party lines either, so all the "poor" republicans and democrats of this country will have to foot the bill via government bail-outs.

PS I hope your friends did okay up in Paradise/Magalia - it will be hold your breath time all summer up this way.

Sorry you had ta cut out early--but then it allowed the rest of us to cut loose without the Rev. watching over us. Ya and that beer, was DAMN GOOD---all of it!

Back on topic.
Kinda makes me understand how the average consumer got so caught up in this mess.

I was wondering if Stam's daughter's wedding made it into this thread because it was either deregulated or a financial catastrophe!

Deregulated------fo sure!

I wish someone would "deregulate" development engineering.

Are you not a prime example?

already been done - down here we call it "San Jose" or "Los Angeles"

Way to turn this into a thread about fish Hankster!

I think the helicopters were pulling water from Lake Oroville - that would mean they scooped up the coho's that they've been planting for the last few years. I'd love to catch an ocean going coho for the size as the lake ones fight like a steelhead but rarely get over 4-5lbs. Of course, the water is so low in the lake now that it's almost impossible to launch a boat anymore.

http://www.crooksandliars.com/2008/07/23...6009x1200327824

I'm resurrecting this thread today because I found out that not only did Phil Gramm's handywork screw the home mortgage business, it also created a loophole for the commodities trading market.

The stock market was regulated after the 1929 crash to prevent speculative trading and commodities were to be outside the influence of speculation. Thanks to Phil and his cronies, commodities futures can now be bought and sold by traditionally "non-commercial" entities such as hedge funds and banks. These groups (and others, presumably) are the driving force behind the surge in oil prices.

The American people have been totally fukked by Gramm and his corporate overseers. Get a rope!

A rope? Yeah, about time.

Are ya' getting that, "I'm mad as hell, and I'm not gonna' take it anymore!" kinda' feeling?

Fannie and Freddie are within a week or two of a full government bailout, both stocks are plummeting this week...we are also seeing increases in "fees" coming to all mortgages which will add an average of $750 in additional closing costs to every loan on top of the other rate and fee increases we have already seen.

What really sucks is that interest rates should be a FULL 1% lower than they actually are today which would put us back in record low rate territory but the few lenders that are left have to make up all the billions in losses they have incurred this year...no better way to move all the inventory sitting around than low rates but alas I am about out of the mortgage bus and going to move into real estate full time focusing on distressed property sales/purchases and let some other schmuck deal with the loan Bullshiat...

well they are done, the govt. now controls 5trillion dollars of residential loans and the fate of all future lending as FHA/VA and Fannie Freddie are the only games in town...expect much higher rates next week and then who knows...cheers

Watch the overseas markets and dollar reaction tonight if they drop and the dollar also tanks which I suspect it will we'll likely see a big sell off here since there are so many foreign sovereign wealth funds invested in FNM and FRE. Either way it'll be panic selling or panic covering.....:>)

I think it already started last week. You cant keep anything quiet, regardless of the insider laws.

some new information out there suggests that rates may go DOWN as much as 1% tomorrow on 30 year fixed loans...that would be interesting.

The jumbo market has been horrible for people building large homes and financing over the jumbo amount for their area, and wanting to lock their rates for an extended period. Luckily our's won't be that way as we'll be under $300K when we're done, I hope.

It would be nice to see that market shore up a bit, because there are still quality borrowers out there that are getting the short end.

Yeah like requiring 20% down.

just one more step in the road to me never getting out of the apartment life.

irie -- you'll be getting news from tacoma soon enough, whether you read the daily zero or the tribune...of course, i'll also be out of work...not a whole hell of a lot of work in the printing industry around this area any more.

quick update on the mortgage rate market this AM, it DOES look like we are in for a huge rate drop this week. The mortgage backed bonds have rallied big time this morning and all indicators are on a float rate scenerio...expect 30 fix rates in the mid 5's or lower by end of the week.

Yes, you are screwed if you cannot verify income but this could be the impetus to get a bunch of refi's going along with getting people off the fence on purchases...tough to beat a combo of record low rates and plunging prices...cheers

Good borrowers with a credit score of 700+ should have no issue borrowing with as little as 5% down.

Don't forget the farm (Rural housing) home loan program. I have some homes in Eatonville that I should be able to get people in for with no down payment. With no PMI and the lower down, its a great loan program. A lots of areas that aren't that far out. I would need to get a map , but I believe Orting, a large portion of South hill (puyallup) boardered by 176th to the west and 78th ave to the North, and then the rest of South Pierce County past 200th, and Yelm are all part of it. That's the area I have worked, but I know every county has portions that quailry. There is also a Pierce County and City of Tacoma assistance that will cover a large portion of the down payment and closing costs too. They are all restrictive, with top and bottem income levels, but for first timers they do work.

http://www.fool.com/investing/dividends-...d-freddie-.aspx

The People Responsible for Fannie Mae and Freddie Mac
By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly
September 10, 2008 Comment (6) Recommend (6)
It was a wise man who noted that the only corporate structure more insidious than a government-sponsored monopoly is a government-sponsored and investor-owned monopoly. In the end, as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have now so painfully proved, trying to serve the master of public policy while generating returns for investors will lead to disaster.

Fannie and Freddie collapsed because they were part and parcel of the widespread gross financial misconduct that has taken place in the United States over the past decade. It's easy to miss this fact, but the reality is that too many people were making too much money pumping up the housing market. In 2005, the Office of Federal Housing Enterprise Oversight (OFHEO), the erstwhile regulator of the two, attempted to limit their use of off-balance sheet entities to groom earnings. In the end, it didn't, because, as one reform-minded politician admitted, Congress was afraid of undermining the housing boom.

Some are more culpable than others
As part of the conservatorship, the Department of the Treasury has demanded that Daniel Mudd and Richard Syron, the CEOs of Fannie and Freddie, respectively, step down. Certainly, at the time of a corporate collapse, those in charge have to bear some responsibility. But Mudd and Syron came into their roles when the great pillaging was well in process.

At some point not too long from now, the nation's attention is going to turn from the immediate players to those who benefitted the most, shouted down the skeptics, and/or stood by as Fannie and Freddie deviated from their core business in the name of growth and/or mission. These people are keeping a low profile right now, until the taxpaying public starts paying attention to something else. As taxpayers, we don't particularly enjoy our role in this relationship, and we're hopeful over the longer term that the following folks cease to enjoy theirs.

Franklin Raines
Fannie Mae was always a political beast, but it reached its elbow-swinging heights during the time when former Clinton administration budget director Franklin Raines sat in the CEO chair. Under Raines' leadership, Fannie overstated earnings by a stunning $10.6 billion, all the while paying Raines and his senior management team massive bonuses.

It was under Raines' management that Fannie morphed from being a company in a sleepy business -- issuing debt to buy mortgages from lenders -- into a far more risky and exciting one: buying up mortgages and holding them, thus capturing the spread between its borrowing costs (which were lower than anyone's other than the federal government's) and the interest rate received. It was a great business, except that it had nothing to do with Fannie's charter. According to a May 2006 report from OFHEO, Raines became obsessed with keeping earnings per share as high as possible and motivated management to achieve that goal by setting up a bonus system that rewarded increasing earnings per share (EPS).

The thing is: Any company can hit an EPS number if it doesn't worry about little things like accounting rules, debt levels, and risk factors. All told, Raines pulled in some $90 million between 1998 and 2003, the majority from bonuses. And when OFHEO began to ask uncomfortable questions, Raines actively lobbied Congress to cut its funding. In April, Raines agreed to disburse $24 million for his role in the accounting "errors."

Timothy Howard
Former Fannie Mae CFO Timothy Howard is another major player who is probably cowering in a corner somewhere. For all of the expletives and derogatory names thrown at former Enron CFO Andrew Fastow, he at least stayed around to take his punishment. Inmate No. 14343-179 pleaded guilty to fraud and is serving a six-year prison term. Howard, on the other hand, saw the writing on the wall -- largely because he was the author -- and got out of Dodge.

As Fannie's CFO from 1990 to 2005, Howard signed off on the financials that overstated the company's earnings by $10.6 billion from 1998 to 2004. His reward? A cool $14 million in salary and $16.8 million in bonuses during the period -- bonuses based on the earnings plan that Raines set up.

While Howard was not the only person at Fannie guilty of constructing fraudulent financial statements quarter after quarter, as CFO he is most responsible for the integrity of said statements. Whether he left early enough to avoid culpability remains to be seen. However, we've heard through the low-security-prison grapevine that Fastow is lonely these days and wouldn't mind talking shop with a fellow former CFO.

Barney Frank
The House Financial Services Committee chairman and Democratic congressman from Massachusetts has long been a proponent of both Fannie and Freddie, assuring the public that their mission to encourage home ownership outweighed the distortive risks they brought to the market, and that the federal government was not, in fact, on the hook for their liabilities. In fact, it seems clear now that Frank had no idea of just how poor a grasp Fannie and Freddie had on their lines of business. As recently as Aug. 25 he told Money magazine, "Fannie and Freddie are better off than the market thinks. ... Part of the problem is rumormongering by short-sellers."

What's more, though Frank will blame past political opponents for failing to further regulate the mortgage market by banning products such as subprime loans, the fact of the matter is that the very presence of Fannie and Freddie incentivized brokers to overstate the creditworthiness of borrowers and then pass on that risk to the federal government, all while being cheered for helping more people "realize the American Dream." While we can all agree (I hope) that mortgage markets only function when -- as Frank told Money, banks "do not lend money to people who can't pay it back" -- Frank's ideology in this case blinded him for decades to the realities of the marketplace and the operations at these companies, leading him to stonewall realistic reform efforts that might have helped us avoid the current calamity.

Angelo Mozilo
There's good reason for Angelo Mozilo to hide under a desk these days. Few, if any, extracted more personal profit from the credit bubble than the CEO and founder of Countrywide Financial. Mozilo's talking points always borrowed heavily from the propaganda of our government-sponsored enterprises (GSEs). Countrywide liked to pretend that it was performing some kind of public service -- "breaking down barriers" -- by making homes more "affordable" to the average (or subaverage) wage earner. Unfortunately, as speculation drove home prices to ridiculous levels across the U.S., "affordability" came to be the code word for gimmicky, high-interest subprime loans lavished on the riskiest of borrowers in order to get them into a mortgage that would soon be bundled and shipped off to the suckers on Wall Street.

Unfortunately for borrowers and investors in Countrywide's mortgage paper, the American Dream of home ownership quickly morphed into a nightmare. Default rates surged, followed by the inevitable foreclosures, and mortgage paper backed by Countrywide loans became as valuable as post-bubble, dot-com stock options. Countrywide was only spared the ignominy of bankruptcy when its longtime sugar daddy, Bank of America (NYSE: BAC), stepped in to take it out.

As captain of this sinking ship, CEO and founder Mozilo was, for a time, very vocal in defending his company's legacy. But like so many others in America's great housing bubble, talk was one thing, and actions were another. As the housing bubble began peaking in 2003 and 2004, through the period when Countrywide's risky lending fell apart, Mozilo engaged in one of history's greatest stock dumps, selling more than $480 million worth of shares, according to the tally of insider filings on secform4.com. This graph tells the tale.

Alan Greenspan
If not the boldest of the group, then at least the most public, Greenspan, the man many are now blaming for the housing bubble (there were a brave few that piped up years ago), has refused to go quietly into his well-padded retirement. The man charged with providing the country with a financial voice of reason fell far short, so much so that it might be comical if it weren't so tragic.

Greenspan's denial of the possibility of a housing bubble has been widely derided in the past year, but a single statement could be excused as human error. However, a quick scan shows that this wasn't a single event. He also promoted the adoption and expansion of adjustable-rate mortgage (ARM) products in early 2004, when short-term rates were at or near historic lows. That same year he claimed, "securitization by Fannie and Freddie allows mortgage originators to separate themselves from almost all aspects of risk associated with mortgage lending." And separate themselves they did, ceasing to perform any kind of due diligence as to the ability of borrowers to pay for the homes they were buying.

Now retired from his role as the nation's monetary conscience, Greenspan continues to espouse his, er, theories on the financial crisis through editorials in which he denies any culpability for the events of the past three years. He is also applying his experience and insight as an advisor for Paulson & Company, a hedge fund which cashed in on billions of dollars by calling the collapse of the subprime mortgage market that Greenspan helped create.

An ignominious list
To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

Thanks for listening.

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